Chip stocks fall on ASML forecast cut, potential US AI chip export cap

Oct 15 (Reuters) – Semiconductor stocks in the United States and Asia fell after chip equipment maker ASML (ASML.AS), opens new tab cut its annual sales forecast over weak non-AI chip demand while a report said the Biden administration was considering capping sales of advanced artificial intelligence processors to some countries.
AI chip giant Nvidia (NVDA.O), opens new tab, which had briefly surpassed Apple as the world’s most valuable company the previous day, dropped 4.5%, wiping out about $158 billion from its market cap, widening the gap with Apple’s value of $3.56 trillion.
Other chip firms, including AMD (AMD.O), opens new tab, Intel (INTC.O), opens new tab, Arm , Broadcom (AVGO.O), opens new tab and Micron (MU.O), opens new tab, fell between 3.2% and 5% at Tuesday’s close, which dragged the Philadelphia SE Semiconductor Index down nearly 5% and weighed on the Nasdaq index (.IXIC), opens new tab.

U.S.-listed shares of ASML closed 16% down after the Dutch company published results ahead of schedule in an apparent error, reporting weak bookings, lowering forecast, and indicating slower chip demand recovery outside the AI sector.

Despite the surge in demand for AI-related chips, the company reported that other segments of the semiconductor market remain weaker than expected, with logic chip makers delaying orders and memory chip makers only planning “limited” new capacity additions.

“ASML’s fat finger error isn’t cause for concern in itself, but the content of the release didn’t make comforting reading for investors,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

Stocks of Asian chipmakers, which are among ASML customers, also lost ground on Wednesday, with Taiwan Semiconductor Manufacturing Co (2330.TW), opens new tab, down 1.9%, Samsung Electronics (005930.KS), opens new tab falling 2.1% and SK Hynix (000660.KS), opens new tab declining 2.5%.
Samsung Electronics earlier this month warned its third-quarter profit would come in below market expectations, as it is struggling to capitalize on demand for artificial intelligence chips. In contrast, Samsung’s rival, TSMC, which counts AI leader Nvidia as one of its major customers, is expected to report a 40% leap in third-quarter profit on Thursday.

Separately, Bloomberg News reported on Monday that U.S. officials have been considering implementing a cap on export licenses for AI chips to specific countries – mostly in the Persian Gulf region, citing national security concerns.

Washington is increasingly concerned that the Middle East might serve as a channel for China to acquire advanced American chips that are prohibited from being directly shipped to the Asian country.

“With the AI revolution expected to play such a huge part in upping productivity and enabling other technological advances, it’s not surprising the U.S. wants to do what it can to maintain its dominance,” said Danni Hewson, head of financial analysis at AJ Bell.

Sign up here.

Reporting by Akash Sriram and Jaspreet Singh in Bengaluru; Additional reporting by Hyunjoo Jin in Seoul; Editing by Tasim Zahid and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Purchase Licensing Rights

First appeared on www.reuters.com

Leave a Comment